We’re making some additions to our proposals for phone-paid subscriptions

04 April 2019, Mark Collins, Head of Policy

The proposals are aimed at meeting consumers’ expectations while facilitating innovation and growth of subscription services. They include requiring that there should be two clear stages in the sign-up process, an example of the first stage being a requirement for providers to include a PIN as part of the process of signing consumers up to a subscription for the first time. They also introduce a new approach to receipts. These are in line with existing best practices and what consumers expect.

It’s vital that consumers understand when they are looking at a promotion, and when they are in a payment environment.  Research commissioned by the PSA has shown that consumers are often not familiar with phone-payment as a way of paying for subscription services online. Inadvertent sign-ups to subscription services have caused bill shock, driven complaints to the PSA, and damaged the reputation of phone-paid services more broadly.

Ensuring there is enough friction in the sign-up process and better information will address these challenges, protecting consumers while enabling providers to develop new services and realise the potential of phone-paid subscriptions as a payment model.

We’re publishing an addendum to our existing consultation, with additional proposals for changes to our subscriptions regulation. This sits alongside the existing proposals published on the 19th of February, which are still being consulted on.

The key new measure is to add Mobile Originating SMS (MO SMS) as one of the possible methods that service providers could use to enable consumers to provide their consent to subscribe to services, as part of a two-stage process of providing consent.

MO SMS is an established sign-up method that is currently used across a range of phone-paid services, including charity text donations and broadcast competitions. It represents a convenient sign-up option which offers clarity and ease-of-use to consumers.

Using MO SMS, a consumer sends a text message to a shortcode, usually after seeing a promotion from a service provider which asks the consumer to do so. This message notifies all relevant parties - including the consumer’s mobile network - of their desire to sign up to a service and their consent to be charged.  If you’ve voted on a TV talent show or donated money to a charity by text, you’ll be familiar with this.

Alongside this new proposal, the addendum sets out the PSA’s proposed approach to align the language of our existing Special conditions, such as those currently in place for online competition and online adult services which were introduced in 2017, with the language of the proposed new Special conditions for subscription services.

This would ensure a more consistent and user-friendly regulatory regime, with clear requirements for providers. These consequential amendments also ensure that service providers continue only to have to consult a single set of Special conditions, for example for online competition and online adult services.  Consumers and providers alike expect clarity and consistency in regulatory requirements, and this has been an important consideration for the PSA throughout this process.

The consultation on the proposals, including the addendum, has been extended and now closes on 3 May 2019. As always, we’re very keen to hear your views.

The addendum and information on how to respond can be viewed here.